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Asia Pacific: Taiwan - An island at a crossroads

Island is struggling to maintain strong economic ties with China without broaching issue of reunification

Members of a Taiwanese military band (R) and people wearing hats in the colours of Taiwan’s national flag (L) take part in celebrations to mark National Day in Taipei on October 10, 2013. Taiwan President Ma Ying-jeou on October 10 hailed a new trade pact with China as protesters hurled shoes and carried a mock coffin to oppose the deal and demand his resignation.

Photograph by: MANDY CHENG
, AFP/Getty Images

In more ways than one, Taiwan is at a crossroads these days.

Known for decades as one of the four Asian “tigers” (along with South Korea, Hong Kong and Singapore), with boundless GDP growth and high status among global economies, the island is now faced with the same issues plaguing many industrialized societies — a low birthrate, an aging population, slow employment growth, and an overall economic uncertainty.

But because of Taiwan’s location (wedged smack-dab in between world powers such as China, Japan and the United States), the island has benefited from playing a delicate game of economic cooperation with Beijing. Pundits now speculate, however, that the government in Taipei must now choose its path carefully as it navigates the tricky relationship — especially as challenges begin to mount both externally and internally.

The improvement of relations across the Taiwan Strait after Ma Ying-jeou was elected president in 2008 has brought vast economic opportunities to the island.

Since reaching the cross-strait Economic Cooperation Framework Agreement (ECFA), bilateral trade has dramatically increased, and direct flights and looser travel restrictions have created an atmosphere of open business and cultural exchange. China is Taiwan’s biggest trading partner, and many believe a closer economic relationship with Beijing means a lower likelihood of armed confrontation.

But Taiwan’s valued status-quo — of economic cooperation without an official political relationship with Beijing — may be facing some hefty challenges.

Taiwanese officials have made their vision clear: As a small island with few natural resources, it must do business with as many partners as possible, either bilaterally or through international trade organizations. To that end, Taipei is committed to making the island a “free economic zone” while pursuing relationships such as the ECFA with China and the Trans-Pacific Partnership headlined by the U.S. and its allies.

But at the recent APEC conference in Indonesia, Chinese president Xi Jinping met with the Taiwanese delegation, stating that Taiwan should not indefinitely pass on the political question of reunification with China from generation to generation. Xi said Taiwan should not be looking to only maintain economic ties — potentially raising concerns that Beijing is now pushing to advance the reunification discourse.

Nancy Chen, Taiwan’s deputy minister in the Council for Economic Planning, said China is Taiwan’s “utmost trading partner,” but added that Taipei is aware of the sensitivity of the political situation.

“The timing (for a political discussion) is not ripe yet,” Chen said. “When will it be? I don’t know, maybe for another generation. But we will focus on economic cooperation and let the other parts come as they may.”

Meanwhile, internal pressures may also be pushing the current Ma administration. The president’s approval rating is at a historic low after a number of controversies have rocked his government, including a military scandal that resulted in the sacking of two defence ministers and a power struggle between Ma and the leader of the legislature, Wang Jin-pyng.

At the recent National Day celebrations, protesters were out at several locations around Taipei — at the same time holiday events were taking place downtown.

With Ma being the key force behind more open economic ties with China (including plans to have official representative offices established in Beijing and Taipei), many pundits speculate that the president’s possible fall from power could dramatically alter the direction of Taiwan’s status-quo policy.

It is something to pay close attention to as political intrigue mounts in Asia — with Beijing, Washington, Tokyo and other regional powers all calculating their next move in the increasingly contentious waters of the Pacific.

Members of a Taiwanese military band (R) and people wearing hats in the colours of Taiwan’s national flag (L) take part in celebrations to mark National Day in Taipei on October 10, 2013. Taiwan President Ma Ying-jeou on October 10 hailed a new trade pact with China as protesters hurled shoes and carried a mock coffin to oppose the deal and demand his resignation.

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